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An Overview: the Near Ecosystem
L1 for you - NEAR, far wherever you are!
Published on15 Nov, 2022
With numerous blockchains flooding the web3 market with their unique solutions to solve the blockchain trilemma, NEAR is among the few that stand out. After drawing comparisons with the likes of Ethereum, Polkadot, Solana and Cosmos, the NEAR protocol has sure made a mark through its scalability and low transaction fees. The NEAR network is a climate-neutral, high-speed, and low transaction fee Layer-1 Blockchain platform. But how exactly does NEAR work? What distinguishes it? How is it dealing with the present macroeconomic situation? This report is your one-stop shop for an in-depth examination of the NEAR system, its tokenomics, on-chain data, and current developments. This article assumes that the reader has a working knowledge of blockchains. This report can be read by anyone from a highly technical engineer to a DeFi marketer or community manager, irrespective of their technical knowledge in the field. So let’s dive in!
The NEAR protocol launched its mainnet in 2020 and belongs to the third generation of blockchain technology. The design of this project is centered around providing its users with a smart contract platform while simultaneously achieving the goals of scalability, interoperability, and sustainability. This PoS-based platform touts hosting serverless applications and smart contracts with easy access to open finance networks and benefits from an entire ecosystem of open web components.
The NEAR protocol has risen to this status of recognition and acceptance through its full implementation TPS of 100,000. This significantly outpaces Visa’s 7,000 TPS and Ethereum’s 20 TPS. Furthermore, it provides 400,000 transfers at 2.4s finality for a low $0.01 cost.
These astounding statistics have been made feasible by NEAR’s in-house sharding technology, Nightshade. Each shard creates a “chunk,” which is a portion of the following block. Thanks to Nightshade, validators are no longer required to process all incoming transactions, but only those inside shards. This increases the network’s overall transaction carrying capacity, allowing Nightshade to theoretically scale indefinitely. Because the network provides equitable load distribution across the dynamically assigned shards, NEAR’s chunk producers can run their systems on minimal hardware. The project also plans to implement dynamic resharding which will make it possible for the NEAR protocol to automatically create and destroy shards based on the demand for its blockchain. Since the network automatically creates lower entry validator spots and more shards based on the actual user demand, the more popular it gets the more decentralized and scalable it becomes.
The PoS mechanism is employed by NEAR to obtain consensus. For block creation, it employs its variation of BFT consensus, known as Doomslug in conjunction with a finality device. Doomslug enables Near to achieve finality in just one round of communication (2s). The architecture ensures that transactions are irreversible, and participants are penalized if they attempt to skirt the rules. Such rapid completion enables unfettered and nearly immediate composability across shards.
The network also completely abstracts away the implementation details of sharding for both users and developers and makes it look like a single blockchain. Aurora is an Ethereum smart contract implementation solution for the Near blockchain. NEAR, rather than being an EVM-compliant blockchain, implements an EVM layer on a smart contract. It is neither a Layer-2 solution nor a sidechain, and it does not require its own set of validators. This implies that developers can not only build smart contracts in Solidity and simply convert existing Ethereum apps, but they can also leverage the network’s complete real-time and immediate security, unlike many Layer-2 solutions. This is perhaps the finest representation of the modularity and resilience of the Near runtime.
The Ethereum emulator Aurora, the app-chain Octopus, and the DeFi platform Rel Finance are among the network’s notable and trending initiatives. A recent partnership between the NEAR Protocol and Google Cloud is only going to increase the building and scaling of Web3 projects and DApps. This transfer of tokens, NFTs, and digital assets between the NEAR and Ethereum blockchains is made possible by the NEAR Rainbow Bridge. The NEAR Rainbow bridge is the only permissionless, trustless bridge to Ethereum.
The network’s native token is named $NEAR. This token is accessible to all current accounts on the network. The primary native asset of NEAR, like any other token in a PoS network, may be used to complete transactions, participate in the staking process by running a validator node, and participate in governance procedures to help influence the distribution of network resources, as well as decisions regarding the network’s growth and policies. The NEAR token enables cost-effective synchronization of all network participants as well as innovative behaviors among apps built on top of the network. NEAR’s use of PoS provides Sybil resistance from DDoS (distributed denial of service) attacks. A user might earn the NEAR token through staking offerings, or by just being an active member of the NEAR community. NEAR also conducts regular hackathons, and winning these competitions is also a great way to get your hands on some NEAR!
The genesis block of the NEAR network created 1B NEAR tokens, which were systematically distributed to enterprises and individuals. The main net rollout in October 2020 also saw the commencement of inflation, transfers, and vesting schedules. A more detailed description of the token initial token distribution has been illustrated below:
Since its launch, the token has seen a rise of 2500%, reaching an all-time high of ~$17. Nevertheless, the NEAR token has also suffered the brunt of the economic strain and seen an unprecedented drop in value. At the time of writing, the $NEAR token was trading at $2.22, down 48% from its Q3 average of $4.23.
The NEAR protocol employs the use of both inflationary and deflationary mechanisms. An annually fixed inflation of 5% distributes 90% of its assets to the validators and the remaining 10% to the protocol treasury. This means that the protocol treasury receives 0.5% of the total NEAR supply every year. This amount is used for the development of the ecosystem. At the end of Q3, the treasury had a balance of 10 million NEAR ($36 million).
The transaction fees of the NEAR network adjust according to network computing and bandwidth. About 70% of these fees are burned, increasing the scarcity (hence demand) of the NEAR token, and the remaining 30% is appropriated to the smart contract that facilitated the transaction. This creates a huge incentive for crypto developers to build on NEAR since they receive a portion of the transaction fees that their contracts generate. Nearly every wallet on the NEAR protocol is a smart contract that opens up possibilities for the creation of elaborate decentralized applications where users may do things like lend their wallet to someone else or sell their wallet to someone else on a decentralized market. Currently, the token has a circulating supply of approximately 820 million and the chain continues to follow a five-year distribution schedule.
The NEAR Collective has released its plan for the years 2023–24, which includes improvements to the network’s fundamental architecture as well as several additional features. Some of the features that piqued our interest included meta transactions, zero balance accounts, Secp256r1 keys, and global storage rather than on-chain storage. The remaining sharding phases are likewise expected to be completed by 2024. Read NEAR’s blog article for a more complete explanation of their roadmap
In the Q3 of 2022, the protocol also managed to raise a sum of $1B which will be appropriated toward the development of the ecosystem. The arid and unforgiving post-pandemic economic environment had most chains witness a downtrend when it comes to active accounts or daily transactions. But interestingly enough, NEAR set an all-time high of 3M active accounts. The uncharacteristic spike in the network activity was a consequence of the April 2022 debut of the move-to-earn protocol Sweat Economy. Eerily similar to Solana’s Stepn, this London-based technology company incentivizes people to move more via token for steps. A commensurate increase in daily transactions was also seen. The figures can be referred to understand these analyses.
At the helm of the project stand very keen and intelligent minds from Wall Street, and tech firms like Microsoft and Google. The expertise and past experiences of the founders have proven instrumental in gaining investor support for the project. Not very long ago, NEAR protocol also announced that it had secured $150M from various crypto VCs. This is especially significant since post-ICO raises (that too in a recession cycle) is proof that investors believe the project has long-term potential.
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